Like the Federal Reserve, the Administration and Congress should have done more in the fall of 2009 and early 2010 to aid the recovery. I remember that fall of 2009 as a very frustrating one. It was very clear to me that the economy was still struggling, but the will to do more to help it had died.This was "awesome folly," as Krugman correctly states.
There was a definite split among the economics team about whether we should push for more fiscal stimulus, or switch our focus to the deficit.
But let's look at the politics, not the economics. What was more likely to keep Obama from re-election: high unemployment, or a high deficit? Yes, that's a rhetorical question.
We are pushing 10% unemployment ... still. This does not seem to concern very many people inside the Beltway, except to the extent it encourages the Republicans. Has Obama decided he doesn't want to keep his current job?
... Re: deficit reduction, the 10th anniversary of the Bush tax cuts merits notice.
Big debt: Between 2001 and 2010, the Bush tax cuts added $2.6 trillion to the public debt, 50 percent of the total debt accrued during that time. Over the past 10 years, the country has spent more than $400 billion just servicing the debt created by the cuts.Via. And that, remember, is what was so important to the GOP that they were willing to cut a deal with Obama on the budget.
Supply-side failure: Far from paying for themselves with increased economic activity as promised, the tax cuts have depleted the public treasury. Tax collections have plunged to their lowest share of the economy in 60 years.
No jobs: Between 2002 and 2007, employment increased by less than 1 percent when the economy was supposed to be expanding. Employment growth barely kept pace with population growth. Between the end of 2001, when the country was in a recession, and the peak of the real estate bubble, er, economic expansion in 2007, the US economy performed worse than at any time since the end of World War II.
Rich people benefit: The best-known result of the Bush tax cuts is that virtually all the benefits were conferred upon people who didn’t need them at all and who didn’t use the money to, say, create more jobs or pay their workers better. Median weekly earnings fell more than 2 percent between 2001 and 2007. Meanwhile, people making over $3 million a year, who account for just 0.1 percent of taxpayers, got an average tax cut of $520,000, more than 450 times what the average middle-income family received.